There are many things that you probably wish you could do over, but you don’t want buying your first home to be one of them.
You should feel excited and prepared when the time comes, so we’re here to offer you 10 first-time homebuyer tips.
1. Start saving now
Start saving now, like, right now. Seriously. This is the most important of all the first-time homebuyer tips you’ll hear.
Even if you’re happy where you’re at. Even if you don’t want to buy a house for another five or more years, start saving.
There are so many costs to buying a home. A first-time buyer might not even be aware of everything they’ll need to save for.
The cost to buy a new home includes:
- Down payment
- Closing costs
- Appraisal fees
- Mortgage insurance
- Property taxes
Factor in the cost of movers, moving supplies, new furniture or appliances you’ll need right away, and immediate repairs that may need to be made.
The heftiest upfront cost is the downpayment. Some programs that are helpful to new homebuyers, like an FHA loan, don’t require a full 20% down payment. But even in that case, you will need to purchase private mortgage insurance (PMI)
2. Work on your credit
Your credit score and history carry a lot of weight for lenders. These will be clues in figuring out if you’re a risky or reliable borrower.
Things like outstanding debts, maxed out credit cards, too many lines of credit, or past judgements or foreclosures will be red flags to lenders.
Not having any credit at all is also not ideal.
In either scenario, get your credit in good shape before pre-approval. If your credit score is low, you’ll want to build it back up by paying down debts, making payments on time, and cleaning up your credit report.
For buyers with no credit, don’t start applying for credit cards at every store you shop at. Too many hard inquiries will give you a low credit score.
Get one loan or line of credit first, even if this requires a co-signer, and make consistent payments every month.
You can also apply for a secured credit card. The bank will report your payments to the credit bureaus and you get a card with a secured amount as your credit limit.
3. Get pre-approval
Pre-approval is not required, but it is one of the top first-time homebuyer tips.
It’s not an official loan approval but rather an estimate of how much of a mortgage loan you can likely qualify for based on your financials.
The process is done through a lender. You don’t have to work with the same lender who did your pre-approval for your mortgage loan.
This will give you a budget to aim for when you’re looking for a house.
Most sellers will look for a pre-approval letter to ensure that their buyer can qualify for the home purchase.
4. Shop around for lenders
As we mentioned, you don’t need to work only with the lender that provided your pre-approval.
If you go with the first lender you talk to, you won’t know if there are better rates or terms elsewhere.
A simple method for finding the right lender is to look into three different ones that you might like to work with and compare their loans.
Luckily there are also online platforms, like My Perfect Mortgage, which can match you with the right lender for your situation.
5. Find a realtor
A real estate agent has the experience to offer first-time homebuyer tips and tricks to avoid common mistakes.
You can start your search by asking around. Friends and family in your circle have likely worked with someone they can recommend. Or maybe a friend of a friend recently bought a home and can give you a referral.
Search on places like Zillow or even Facebook. Find who is available around you and use reviews and other details to narrow down your choices.
It’s also okay to conduct interviews and ask them questions such as:
- “How long have you been in real estate?”
- “How many homes have you closed this year?”
- “Have you sold any homes in the neighborhood I’m looking in?”
- “How often will we communicate?”
- “What fees will I be responsible for?”
Tthe realtor’s buyer agency agreement outlines these terms.
6. Decide what you want
What needs do you have that aren’t met at your current residence?
Perhaps you need a dedicated home office space or a basement for fitness equipment. Maybe you need a yard for your pets or children.
Do you frequently have guests or elderly loved ones stay with you? Do they need special accommodations, such as a no-step entrance or spare bedroom?
Take all of this into account so you can deliver a list of needs and preferences to your realtor.
7. Stick to your budget
It’s easy to get caught up when you’re house shopping.
Whether your realtor shows you a home at the top of your budget or you get caught in a bidding war, various things can distract you from the number you previously agreed on.
While there may need to be compromises made when you’re shopping, your budget shouldn’t be one of them.
You may be seeing that swimming pool in the backyard or those quartz countertops, but you’re not seeing the property taxes you’ll need to pay, the insurance, the higher monthly payment, or the increase in your utility costs.
You came up with that number for a reason and you should stick to it.
8. Get an inspection
Once you do find that perfect home in your price range, pay for a home inspection to find out if it really is perfect.
Standard inspections often don’t look for issues like pests or mold, so find out what the inspection entails and if further inspections are needed.
Inspectors should be looking for issues that could cause you problems down the line, such as:
- Electrical problems
- Roof condition
- Structural and foundation issues
- Plumbing problems
- Basement, attic, and crawl space condition
- Signs of water damage
You should also attend the inspection so that you can ask questions as you go along.
Depending on the market, you don’t necessarily have to offer the amount that the home is listed for.
This is another benefit of having a real estate agent — they will communicate with any potential sellers, give recommendations, put offers together, etc. They can tell you whether there are other offers on the house or if it’s been on the market for a while.
Sellers sometimes agree to pay for inspections or even closing costs. If repairs need to be made, you could ask the seller to cover those costs or lower their asking price to accommodate.
10. Close with Confidence
This is where you will rely on your loan officer, realtor, and any other member of your team to ensure that this process goes smoothly. You don’t want any surprises but be prepared for delays as they are not uncommon.
Prepare for closing by creating a checklist of everything you need to do. House closings typically take around 45-50 days to complete. Tasks could include:
- Schedule an appraisal
- Prepare your loan documents
- Put together your down payment (usually can’t be paid in cash)
- Secure insurance
You should also have a final walkthrough the day before your closing to take one last look at the house once the seller has moved out. Bring your contract to ensure that the home is in the condition it was reported to be in.
Test the appliances, light switches, garage door openers, all outlets, and anything else. Be sure to take your time to see if everything is in working order.
Double-check with your lender what you need to bring on the day of closing and then all that’s left to do is sign on that dotted line.
Not everything can be perfect, but having the perfect mortgage is a good start to becoming a happy homeowner.
Now that you’ve read our top first-time homebuyer tips, get started with My Perfect Mortgage and let us match you with the right lender for you.